Pump up the programmatic: Google selling streaming audio ads

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Credit: Illustration by Tam Nguyen/Ad Age

Google is plugging into streaming music services like Spotify and Pandora to deliver audio ads.

On Wednesday, the company announced that it's supporting audio ads through DoubleClick, its programmatic ad platform. That means brands that use DoubleClick for their ad buying can now buy audio ad inventory available in streaming services including Spotify, Pandora and SoundCloud.

Pandora will open to DoubleClick "soon," according to Google's announcement, while Spotify, TuneIn and SoundCloud are open as of today.

"Audio advertising will continue to grow," said Jean-Claude Homawoo, product manager at DoubleClick, in a blog post on Wednesday. It's clear that brands should invest in reaching consumers with the right messages in audio just like they do in every other medium."

Audio ads are a growing niche in the industry as streaming services increasingly rely on advertising to subsidize their businesses. Audio ads generated $1.6 billion in the U.S. in 2017, a 39 percent jump from the year before, according to the Interactive Advertising Bureau.

That's still a small piece of the $88 billion overall U.S. digital ad market.

Spotify and Pandora—which already sell ads programmatically through their own self-serve platforms and other programmatic networks—are trying to energize their ad businesses. In the first quarter of 2018, Spotify generated $115 million in ad sales, which represented a 38 percent increase year over year. Meanwhile, Pandora generated $215 million in ad sales in the first quarter, a slight dip from $223 million in the same period of 2017.

Pandora was late to offer audio ads through programmatic pipes. It sold video and other ad formats through automated marketplaces, but reserved audio ads for more exclusive sales channels. That changed in February, when Pandora started selling its first audio ads programmatically through a private marketplace it created with select ad tech partners.

Relying on programmatic advertising can be a tough call for companies because they're often associated with lower prices, devaluing the inventory. However, they also make it easier for advertisers to buy and could attract more interest from brands to try out the ad offering.

And on Tuesday, Pandora bought an ad tech company called AdsWizz, which developed a programmatic ad demand platform, for $130 million in cash and stock.

"Pandora has long understood the value that a sophisticated advertising platform can bring to everyone in digital audio," said Pandora CEO Roger Lynch in an announcement about the acquisition.

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CORRECTION: The product manager at DoubleClick is named Jean-Claude Homawoo. The name was misspelled in an earlier version of this article.

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